FirstEnergy sued over alleged misrepresentation of earnings

AKRON, Ohio (AP) - A Philadelphia law firm sued FirstEnergy Corp. on behalf of investors Thursday, saying the company misrepresented its earnings and accounting issues.
The Berger & Montague law firm, which also has handled investor lawsuits against Rite Aid, Sotheby's and Sunbeam, filed the class-action lawsuit in U.S. District Court in Akron, where FirstEnergy has its headquarters.
The lawsuit was filed on behalf of anyone who may have purchased stock in the utility company between April 24, 2002, and Aug. 5, when it announced plans to restate its earnings for all of last year and the first quarter of this year. The restatement reduced FirstEnergy's results by a total of $99 million.
The company attributed the restatement to an accounting adjustment and said it was unrelated to the investigation of its role into last week's blackout that left 50 million people without power.
Experts have said the outage appears to have started on the northeast Ohio power grid owned by FirstEnergy, the nation's fourth-largest investor owned utility with 4.3 million customers in Ohio, New Jersey and Pennsylvania.
The lawsuit said the company violated the law through the alleged misrepresentations that included deregulation costs and the value of its leased electric generating facilities. The alleged misrepresentations artificially inflated FirstEnergy's stock price, the lawsuit said.
The lawsuit asked for unspecified damages to be determined at trial.
Ellen Raines, a spokeswoman for FirstEnergy, said it was "pretty typical" for such suits to be filed against a company restating its earnings.
"We will address it in the proper venue," she said. "We've completed our restatement and we've explained the reason. It was not a matter of right and wrong. It was a matter of changing the way certain items were accounted for."
The New York law firm Cauley Geller Bowman & Rudman sued FirstEnergy on Monday in Cuyahoga Common Pleas Court in Cleveland on behalf of any American or U.S. business that lost power. The lawsuit accused FirstEnergy of being reckless and causing the outage.
Raines said Thursday that the company hadn't been served with papers from the blackout-related lawsuit.
FirstEnergy serves 4.3 million customers in Ohio, New Jersey and Pennsylvania.
FirstEnergy stock closed down 43 cents at $28.76 per share Thursday on the New York Stock Exchange.
(Copyright 2003 by The Associated Press. All Rights Reserved.)